Arohan’s investing life

Express 1 Expedited Solutions (XPO) provides transportation and logistics services all across North America. The company is small (about 35 million in market cap) with solid balance sheet and trades at a PE less than 10 and a P/S of 0.76. The P/B ratio is quite high for a value stock but this is not necessarily bad. The company operates an ‘asset light’ model where they own very few of their own trucks and use contracted drivers for the most part, this will almost guarantee a high P/B value

This is a company that was formed several years ago with the merger of Express 1 and Segmentz, to a disastrous result. The merger added several new markets and businesses (aircraft charter services) that the new company had a difficult time managing. As a result the company floundered for a while. A restructuring effort saw the company slowly getting rid of the non-core and unprofitable enterprises and the company is back on a growth path. It is now growing at a nice clip of 20-25% on the revenues and has been profitable for a while

For a small and growing company like this it is important to find out if the management is committed to the company. In this case, about 25% of the stock is owned by the insiders, which is a good sign. In addition, Peter Lynch’s foundation is rumored to own about 3% of the stock

The management is also veterans of the industry, seem to be quietly building the company up. You will not find too many press releases coming out of the company. The management seems to care a lot about the shareholders too. This is the only company that I have owned that has ever sent out a note in the mail to remind me to vote on the shareholder’s proposals sent earlier

And lastly, I see their branded trucks on the roads very often in Michigan. The business seems to be good

Related posts:

1. Value investing in small and micro cap stocks